068 – How To Not Go Bankrupt – Shields Harvey

Today’s podcast features my first and arguably, my most important mentor Shields Harvey. When I first went into business I thought I was a real hotshot. My business was growing at over 20% per year and I thought life was good. That was until I got the first call wanting to know why my payment for merchandise was late. That started a cascade of issues that would have put my out of business had I not met Shields.

We get a treat today and have an opportunity to learn from one of the true business masters in the country. Why don’t you leave a comment below or click here to send me an email about what you think.

Transcript:

Narrator: Welcome to TheSustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In TheSustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.

Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.

Josh: Hey, this is Josh Patrick and you’re at The Sustainable Business.

Boy, are you in for a treat today. If you’ve done any reading from my blog and read about some of my adventures back when I was first in business and when I almost went out of business several times, you’ve probably read me talking about a fellow named Shields Harvey. That’s our guest for today.

You know, I probably wouldn’t be here talking with you today if I hadn’t run across Shields and a fellow named Paul Lombardi. When I was about 24 or 25 years old, they took a look at my financial statements and said, “Boy, you’ve got a nice profitable business but if you keep doing what you’re going to do, you’re going to be out of business in about a year or two.” I said, “Well, what do you mean by that?” And they said, “Well, you know, it’s nice to have profits but cashflow is more important.”

And at that point, being an American History major, I had never really known about a cashflow statement. And they very kindly taught me about what a cashflow statement is and the importance of it. And over the years, Shields has been my first – besides my father obviously, but my first and probably most important mentor I’ve ever had in business. He’s been a good friend, a great mentor and absolutely one of the smartest people I’ve ever met.

So, instead of me talking about Shields, I think you probably want to hear from him, so we’ll bring him in.

Hey, Shields, how are you today?

Shields: Hello, Josh. How are you? You’re mighty kind.

Josh: Well, you know, there aren’t many people I can say that have saved my business. You get to be in that world.

Shields: You had a good business to save which is important because we’ve seen some that were already doomed before we got the opportunity to even take a look at it.

Josh: That’s absolutely true.

You know, over the years, most of our conversations have been around how to make a great business and it has been relatively goal-oriented. And recently, you sent me this really cool article which I published in our weekly newsletter. And it essentially was about “enjoying the journey”. Now, it’s kind of hard for somebody who’s a type A to make that change into saying, “You know, I need to enjoy the journey as well as getting to a destination.” Can you comment on that a little bit?

Shields: Yes, certainly. You know, first of all, it’s hard. My motto or one of the things I lived by was, “Success is a journey, not a destination” and, again, to enjoy the journey. But as we went along with the journey I had a tendency to not be satisfied, to say, “Okay, we’ve done this. What’s the next thing we’re going to do?” And if in reading—and even many years ago, I read a lot.

Even, I think, the Disney Corporation was one of those that came forth and said, “Celebrate! And really enjoy the successes. And take a moment to do that.” And I really hadn’t. And then as I began to reflect on life, I said, “You know, life has been great. Life is great. And I hope it continues to be great, and enjoy it, and enjoy the moment.” And it has held me to a great degree.

Just take a breath. And calm down a little. And not continue to be the class A personality that I know I was into some degree, probably still am.

Josh: So, how old were you when you made the discovery that, you know, it’s not just about the destination, the journey’s really important too.

Shields: Josh, I would say, probably–almost 79 now, so I was 72 or 73. I mean, I sat down. I was religious in sitting down every year, even as I moved into semi-retirement and outlining goals and objectives and things that I had to do. And then getting, many, many times wrapped up in those and instead of saying, “You know, I have done a lot of good things and I really ought to savor more of the good things and quit trying” as somebody told me one time.

I took a public speaking class and in the middle of my graduation speech, the two instructors were back putting their hand across their neck and saying, “Cut, cut, cut.” And I wondered what I did wrong. And this woman walked up to me and she looked me straight in the eye and she said, “Would you quit trying to make a perfect speech. Trying to be perfectly perfect is just perfectly awful.” And that really hit home to me. Now, oddly enough, my wife had been telling me, three or four years older, to quit doing that, “To be yourself and just let it flow.”

But I think at that point, which was really in the mid-60’s, I began to think about it. And not until I hit 70 or so, because I would say, “You know, it’s a lot into that.”

Josh: So, it appears to me that most people who reach 65- to 70 years old sort of start thinking about their legacy or the impact they’ve had in the world and stopping to smell the roses. Why do you think it is that people in their 50’s don’t?

Shields: I don’t know. And obviously, I’m not a psychologist. But if you are a driven personality, you have lived your total life on setting goals and objectives and being driven, and you’re sort of in some respects, I guess, comfortable in your own discomfort even though you don’t know it’s discomfort. I mean, that’s just the way you are, that’s your DNA. That’s the way you lived your life. And then when you stop a little bit and saying “You know, ah, things are good. I’ve done a lot of good things and, you know, I’ve messed up a lot but I’m not going to dwell on those” and just kind of smelling the roses, you become a more relaxed, I guess—well, I think Sandra occasionally tells me “a little bit easier to be around at times.”

Josh: Well, I’ve had people tell me that. Although my Tiffany was coming down with – a sort of case of cancer that sort of slowed me down a bit. But, you know, it seems to me that—you know, the title of this podcast is Sustainable Business and something that’s sustainable is meant to last. And if you just look at the short-term goals that we seem to have in business, do you think that hurts sustainability? Or doesn’t it matter?

Shields: I think, generally speaking, it does hurt sustainability. And I think, certainly for the larger corporations today that the emphasis is still on most short-term and quarterly earnings is a detriment to making somewhat the decisions that may have an impact four, five, six or seven quarters in a row but will ensure the viability of that business, particularly in a world that is changing so rapidly both in technology and in global competitiveness.

Josh: So if we’re talking about enjoying the journey which is smelling the roses and taking time out to appreciate what you’ve accomplished, that sort of forces you into a long-term timeframe. Would you say that makes some sense?

Shields: Oh, I think it definitely does. I work for [inaudible 00:08:59] corporations, the small family-owned companies and I can tell you in the billion dollar, in the major corporations, it sometimes ceases to be not only fun but makes sense because they’re so focused on earnings and earnings on a quarterly basis that they do some things to make those quarterly earnings happen, that may not be in the best interest – or even in the immediate, much less long-term viability of the company. But that’s just the way it is.

It’s much, much easier to work with a privately owned company that accepts the fact that there are ups and downs. There will be shifts in the economy. There will be economic downturns. But that if we understand that and if we plan accordingly and just, again, accept that as a part of the journey – because, again, success is a journey and not a destination, we’ll all be better off. Now, having said that, I don’t see that happening in many, many other public companies but that’s just the way it is.

Josh: You know, just a side note, one of my beliefs about public companies, and I may be wrong, is that this focus on putting profits as shareholder value first is often an excuse for bad behavior by public company executives which I just frankly don’t see very much of in privately held companies.

Shields: I think that’s very, very true. But I even take it away from bad behavior. I see one thing – good, viable companies even in economic downturns still spend a lot of money on their people in training. And they very, very seldom go after those budgets. Even in tough times, they’re investing in their people. And time after time, it pays dividends.

I’ve been through it. I’ve been through the economic downturns. And we continued to do training and investing in our people because I have another saying, “Training costs you whether you pay for it or not.” Saying that is, of the lack of training costs you and it costs more than training cost. So you better go ahead and spend that money. But again, as people are looking for short-term profits and say, “Well, we could have a couple of hundred thousand dollars in a big company sitting over there that we don’t have to spend.” And again, I think, it is shortsighted mentality that has a real, severe long-term impact on the organization.

Josh: Since you’ve just mentioned people, why don’t we talk about them for a bit? It seems to me that if I’m going to be able to stop and appreciate what I’ve done, I’m going to need some help along the way. I mean, I’ve never seen a business that’s created – even the small solo businesses have moved to virtual assistants so they’ve got staff even though they’re not on the payroll. So, Shields, you’ve always been big on rewarding people and training people and making sure you have the best people on staff. How did that fit into your success?

Shields: I would not have been successful without it. And I think, and part of that equation is understanding that that—excuse me, I’m digressing a little bit. But I hired an awful lot of good people. But Josh, I made some awful hires and the only thing I would say in that is, as soon as you recognize it and it’s not working and you’ve been fair, address it. I’ve had a philosophy that “I never fired anybody in my life. They fired themselves. I just take them the news.”

Now, I’m not trying to be on the negative side of people but in the executives that I’ve talked to the day and are very, very top. and I asked a question, “What is their track record for hiring key people in key slots?” Most of them, and this surprised me, have told me, “Roughly 50%.” Then I say, “All right, if that’s the case, what did you do?” They said, “If it wasn’t a fit, and sometimes it just wasn’t a fit, it wasn’t that they couldn’t do the job. It wasn’t that they wouldn’t do the job. It was just that they didn’t fit in to the culture or the corporation.” They had to address it and move them aside. And I would say, “If it was anything–

After I learned that, and it took me a few years to really learn that you need to move quickly if the fit’s not there, if it’s not working. Once I learned that, my life became a whole lot better. Not that I ever enjoyed terminating an employee. It was always tough and I would say, “If it’s easy then you’re not doing it right.”

Josh: I would agree with that.

Shields: But that’s a people equation, you’ve got to know.

Josh: Because I used to hire fast and fire slowly. And by the way, I think we should actually do the opposite – I think we should hire slowly and fire fast. But when I finally got around to letting somebody go, who didn’t fit, I’d have about 15 people walk into my office within the next day saying, “What took you so long?” And none of those people ever complained about the person until I let him go.

Shields: Yeah. I mean, I’ve had that happen too. Another part of this people equation is—and you’ve heard me say this, is just a remark that I’ve been making for now, 35 to 40 years, ”If you pay peanuts, you get monkeys to work for you.”

Josh: I can’t tell you, Shields, I must say that at least once a month to somebody. It’s so true.

Shields: What I tried to do was, I wanted to pay at every job level about 15% above what that job level paid. And the reason for that is, somebody couldn’t get unhappy with their job and make a quick knee jerk, emotional decision and say, “Take this job and shove it because I can go down the street and get another job paying the same thing.” And turnover costs you – the horrendous cost of turnover is major, more than people realize. And if you’re paying above that and particularly people fly off the handle or an emotion, say something, it gives you an opportunity to say, “You know what, why don’t you calm down? Why don’t you just go home and think about it. And when we’re both in a little bit different mindset, come back the next day and let’s talk about it.” And then you can point out that if they left, they may be not making the wisest decision. Particularly, the good employee, and that seems to work time and time again.

Josh: I’m taking you’re saying – and I’ve added another piece to it and say, “You know, you pay peanuts, you get monkeys. But the flipside of that is, if you pay a lot of money, it doesn’t guarantee you’re going to get a good person but it guarantees you won’t get a good person if you’re not paying a lot of money.”

Shields: That is absolutely true. And you would talk about the people side, if–

I read a lot of books. I read particularly about coaches – basketball coaches, in particular, but even football and baseball. And all coaches will tell you, “You will never have a winning team if you don’t start out and recruit A players.” Now, recruiting an A player or the top player is not a guarantee of success. But not recruiting an A player, is doggone sure, is no guarantee of success because you’re not going to have the talent there to do what you want to do.

Josh: I would take it a step further and saying, “Not recruiting the A player is a guarantee of failure.”

Shields: Yes.

Josh: So, having that right person which is what we were talking about, you know, if somebody has a cultural fit in a company. That comes in to company values. Do you have any thoughts about business owners articulating the values in their company?

Shields: Yes. I think that every company needs to take–

First of all, you’re right. It starts with the business owner or the owners. They need to step down and say, “What are our values? What do we believe in? What has made us successful so far? And what are we going to stand and abide by?” And then once that has been sort of reduced with a few key words or phrases – and not many phrases, just a few keywords. Communicating that with your people and continually going back, it’s an expression. I remember one thing that we used at every company I was associated with, “There’s no right way to do a wrong thing.” And that was one of my values. And sometimes, when we’re making a decision or trying to do something and we would stop and say, “Wait a minute, let’s stop and think about this. There is no right way to do a wrong thing. Let’s re-visit this and let’s take a different approach.” And that’s just one example.

Josh: Oh, that’s great advice.

Unfortunately, Shields, we are out of time. So, if folks wanted to find you, would you be willing to have a conversation if they were polite and they e-mailed you?

Shields: No question about it. I would certainly enjoy it. As I say, “In the more twilight years of my life, I still feel like I have a lot of experiences and a lot to offer”, and I would be happy to chat with anyone that would like to.

Josh: So, if somebody wanted to get a hold of you, how would they do so?

Josh: Cool. So, if you’re interested, e-mail Shields. I can tell you that he has been a great friend. A fabulous mentor and one of the smartest people I’ve ever met. So, it’s always worth having a conversation with him.

And I also have an offer for you which we just put together – actually, we put together a long time ago but I’ve resurrected it and developed this thing called the Periodic Table of Business Elements. It’s a whole bunch of strategies that you can use in your business and it’s really easy to get. All you have to do is take out your smartphone and text periodic, P-E-R-I-O-D-I-C, to 44222. That’s text PERIODIC to 44222.

This is Josh Patrick. You’ve been at the Sustainable Business with Shields Harvey.

And Shields, thanks so much for your time today.

Shields: Josh, thank you. I certainly enjoyed it.

Narrator: You’ve been listening to TheSustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an e-mail at jpatrick@askjoshpatrick.com.

Thanks for listening. We hope to see you at The Sustainable Business in the near future.

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About Josh

Why would you want to listen to me?

My specialty is working with owners of private businesses. It’s where I have the most interest and can add the most value. If you own a business and are interested in a coaching relationship as well as mentoring, I’m your guy.
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ABOUT JOSH PATRICK

My main focus in life is helping private business owners create a sustainable business that will last past them. I help create great outcomes using life experiences I’ve had during my almost forty years of running and being around my favorite people, private business owners. I’m a student, an entrepreneur and a curious observer of life. Read More